Abano Shareholder Newsletter Shows Improving Performance

Abano has today released its regular
shareholder newsletter, which highlights the Company’s
fast growing trans-Tasman dental businesses and the
improving performance of its Australian audiology
business.

It also mentions a number of accolades received
by Abano from investment professional bodies and independent
brokers. This includes two independent brokers’ upgrades
that increased their target valuation recommendation for
Abano shares (Forsyth Barr to $7.47 per share and Deutsche
Bank to $7.69 per share). In addition, Abano was selected by
Forsyth Barr as one of five companies which, in their
opinion, are creating value by expanding their operations in
Australia.

Abano was also a finalist in two categories of
the 2014 Institute of Finance Professionals New Zealand
(INFINZ) annual awards which were held recently. After
winning the award in 2013 for Emerging Leaders Best
Corporate Communicator, Abano was again nominated as a
finalist in 2014 for this category in addition to being a
finalist in the Mergers and Acquisitions Transaction of the
Year award.

Managing director, Alan Clarke said: “The
value of Abano’s long term growth strategy is now becoming
apparent, and our FY14 Net Profit After Tax (NPAT) is
forecast to increase by more than 60% relative to last
year.

“The forecast improvement reflects the growing
returns from our trans-Tasman dental consolidation
businesses, as well as an improving performance from our
start up audiology businesses in Australia and South East
Asia. The audiology improvement is pleasing, given that,
while not consolidated, the investment losses previously
generated by this business have been a drag on Abano’s
cash flows and have depressed our reported NPAT by over $18
million during the past four years.

“Our entry to
Australia and then Asia took longer and cost more than
planned. It was only after several changes were made to the
local senior management teams in both Australia and Asia
that we started to see improvements in performance.

“The
new executive team in Australia has made a material
difference and we have seen significant improvements in
sales growth over the past two years. This improvement has
provided us with confidence that this business is now on
track to be a positive EBITDA contributor in the FY15
financial year, some 24 months longer than the three years
that was contemplated at the start of the joint venture
under Peter Hutson’s leadership.

“The significant
value of the audiology business has become increasingly
evident as shown through recent third party valuations and
this improved performance supported our offer to buy the 50%
shareholding of the Hutson interests for $12.9 million, to
which there has been no response.

“With this business
moving into profit and the dental group’s solid growth and
increasing profit contributions, Abano shareholders are
expected to enjoy increasing value from their
investment.”

The Abano shareholder newsletter can be
viewed on the Abano website www.abano.co.nz.

The Abano Board has
also distributed, with the newsletter, a letter to the
Company’s shareholders, restating their unanimous support
for Chairman, Trevor Janes, and urging shareholders to vote
against any resolution put forward at the requisitioned
Special Meeting, to remove Trevor Janes from the Abano
Board.

The Special Meeting has been requisitioned by
interests associated with Peter Hutson and by James Reeves,
following their failed takeover attempt of Abano last year
and their ongoing personal attack on Trevor Janes, as they
attempt to control the Company and the Board. Following
approval from the NZX, a Notice of Meeting will be sent to
shareholders.

While Trevor Janes abstained from the Board
recommendation, the other Abano Directors noted: “Abano is
a valuable Company with successful businesses and great
potential. Based on their previous actions, we believe the
reason Peter Hutson and James Reeves want to remove the
Company’s Chairman is to exert control over the Board for
their own benefit.

“We are happy for this to be
determined by shareholders and we encourage all our
shareholders to vote against any resolution for the removal
of Trevor Janes as a Director of Abano, thereby endorsing
the Board and the Company’s strategy. We trust that the
shareholder vote will put an end to the ongoing dispute with
Hutson and Reeves and allow us to continue concentrating on
growing and improving Abano’s already valuable
businesses.”

The Letter to Shareholders can be viewed on
the Abano website www.abano.co.nz.

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